Baylife 99

Published 4:00 am, Sunday, March 7, 1999

Kevin Kelly never considered working in his family business, a Union City packaging company his father started 35 years ago. A successful journalist, he had worked at BusinessWeek for nine years and was considering a news editing position in New York City in 1995 when he got the call.

That call came from his father, Jim, who announced that his vice president of manufacturing was retiring and he wanted Kelly to take over the operations at Emerald Packaging Inc., which prints bags for prepackaged salads and other vegetables. Torn between advancing in journalism or trying something different, Kelly thought about his father's offer for almost a year before deciding to take the leap.

"I began to get the itch to actually do something as opposed to writing about people doing things," said Kelly, 37, whose brother and sister have worked at Emerald Packaging for 14 and 10 years, respectively. "I really wanted to run something someday."

Whether it's out of desire, duty or the path of least resistance, taking over a parent's business is more complicated than moving up the ranks of a company that doesn't bear the family name.

What if there are several siblings who all want the top job and a parent is forced to choose? Or if the heir apparent feels a sense of entitlement and doesn't earn the respect of the employees? Even when a child is groomed for the position and passionate about the work, sometimes it's hard for the parent to pass the torch. And when no one in the family is capable of taking over - or wants to take over - the business, the parent can be faced with letting go of a dream.

As Generation Xers prepare to take the reins of the business, there are even greater complexities. Sons and daughters are expected to get more equal consideration in succession. Parents are living and working longer. And many children are resisting the pressure by choosing a different path.

"Being a family business adds a layer - more than a layer - of deep complexities. You have family dramas. And the meaning of succession is so much more than a business issue," said Dennis Jaffe, a family business consultant who teaches management at Saybrook Graduate School in The City.

Succeeding in succession&lt;

Deciding who will take over is one of the most difficult issues family-owned businesses will face.

"It used to be very easy to pick a successor," said Jaffe, explaining that archaic laws used to designate the business be passed to the oldest son. "Succession means more than leading the business. It can mean being the favored son or daughter; it means winning something. It's loaded with emotional issues."

In the Kelly family, the siblings have decided, at least for now, to run the company as a partnership. Kevin deals with internal affairs, brother Jim works with customers and sister Maura handles logistics.

"One of the advantages here is that the three of us have different interests," Kevin Kelly said. "We don't go into each other's territories or become territorial."

Jaffe said the Kelly family may be the exception to the rule. He's seen families torn apart over such issues.

For example, he worked with a businessman who named his daughter the successor. When the daughter decided to fire her brother, the father stepped in and rehired his son on a contract basis, undermining his daughter's authority.

Jaffe said the second generation often needs to go through management training courses to learn how to handle such sticky issues with finesse. He said a neutral, nonfamily member can also help to resolve issues.

Tiburon business consultant Charles Born said training can also help the next-generation chief executive earn respect from employees, who may be critical of the boss's kid getting the top job. In addition, he suggests a transitional phase of several years.

"Commitment and passion is important," Born said.

"Before the succession is finalized, a good incumbent in the family would have an entrepreneurial spirit and prove him or herself under fire."

Born said clients usually know which son or daughter to hand the business to and rarely try to pressure reluctant children into something they don't want to do.

"Over time, it becomes obvious who is the natural leader - who has performed well, has passion for the business and the capacity for being a manager," he said. "As a general rule, I've found, the rest of the siblings will go along with it."

Choosing a different path&lt;

In past generations, Michael Weiner would probably wouldn't have had to think twice about going into the family business, Byron's Shoes, started by his maternal grandfather in 1939. But his mother would not let him consider it as an option.

"My mother always insisted I would never work in the business," said Weiner, 30, a corporate lawyer with Cooley Godward in Palo Alto. "I think she didn't want me to take the easy way out - that would have been to go to college and jump back in the family business."

Weiner's grandfather, now 81, still works seven days a week at the stores, located in the Tanforan Park Shopping Center in San Bruno and in downtown San Mateo. Weiner expects his mother to continue to run the stores once her father in unable but, beyond that, he does not know what will happen.

While sometimes brothers and sisters are clamoring to take over the business, often no family member is willing to or capable of taking on the responsibility.

"There's a tremendous wave of buyouts of family businesses in every industry. But families can see a buyout as being a total defeat," Jaffe said. "Getting millions of dollars can be seen as defeat because the name of the business goes away."

Florence Stickney, who runs the Center for Small Business at S.F. State, said this generation has many more options than its predecessors. For example, the explosion in the number of women-owned businesses will likely increase the opportunities for daughters.

In addition, she said, more people in their 20s and 30s have chosen to work outside the family business for a few years, even in a different field, before returning to take over.

"What happened in the past is that they automatically slid into the family business," she said. "Now they are going out and doing other things - even starting their own businesses. They come back with a different perspective. They've been beat up. They've had the opportunity to see how other businesses are run. They can take that experience and make the business better," Stickney said.

Eva Chao, 27, learned that when she left the family's San Francisco restaurant business to venture into real estate.

The UC-Berkeley graduate said it was always assumed she'd stay in the business, but she wanted to try something that would make her feel more accomplished and more in control of the factors of success. But some frustrations she found in real estate gave her a new perspective on the restaurant business.

"Before, I thought it was my mom's idea - not mine. I wanted to do something on my own," she said. "The restaurant hasn't changed. I've changed because I was in real estate. Now I see the restaurant as a business. If I didn't go into real estate, I'd wonder what that could have been. I'm glad I ventured out."

Letting go&lt;

Edward Levitch, founder of a Berkeley architecture / general contracting firm, knew early on which of his four sons would take over the business. He remembers the day he handed his then 7-year-old son, Maurice, a hammer and nail.

"When he drove that nail in I said, "Honey, he's going to be a builder.' And I was right," said Levitch, president and senior partner of firm he founded in 1960.

Legally, the elder Levitch, a Jewish Yugoslavian refugee who was liberated from an Italian internment camp in 1944, has passed Levitch Associates Inc. to his son, Maurice, now 38. In practice, however, the two men work together because, at an age when most men have been retired for years, Ed Levitch simply defies his age.

"He's 75 years old and goes to the gym every morning. He comes in reinvigorated," Maurice said. "As much as I'd like him to start backing off - I'd like to have a transition strategy - the truth is, he's going to drop dead one day and then I'm going to take over."

The truth, according to the senior Levitch, is that he's only 74. As far as retiring goes, he says he's done that. But he hasn't let retirement keep him from working 10 hours a day.

"It's his (Maurice's) business and I'm helping him. Actually, I had my ninth annual retirement party. But I decided I rather wear out than rust out," Ed explained.

"He needs me. To replace me and do what I'm doing now would be very difficult. But he is really in charge."

Born, of Charles Born Associates, Growth Management Consulting, said it's important to have a transition strategy, even if the parties involved think they understand what everyone else does.

Born counsels his clients to write their job description, each task in detail. "Over time I will indicate to the owner it's time to pass on some of his job description to the son. That way it's kind of a phaseout. It's a businesslike way to do it and the owner has a lot of control."

Born acknowledges the changing of guard is far more complicated in a family business because it often involves the founder of a dream passing on his legacy. Sometimes the person he passes that legacy to shares the dream, but sometimes it's a different dream.

Maurice Levitch shares his father's passion for architecture and respects what he has built. But in the changing world of construction and architecture, the younger Levitch has not ruled out such opportunities as finding a partnership or being bought out - even if it means the end of Levitch Associates Inc.

"I tell my dad all the time if he wanted to quit today, the legacy is in me and my experience and not necessarily the company," he said. "Whether or not I carry on the firm, that would be his legacy and he would be proud. He likes the idea of his son taking over. He just won't let it happen completely when he's alive and able."

His father seems to understand. "I want my kids to be happy in what they do," he said. "My legacy is going to be that of a good person and a survivor and a father - somebody who cares." &lt;